Warming manufacturing sector cements China's economic recovery

Quality inspectors check a new-energy vehicle in an automobile manufacturing workshop in Yibin, southwest China's Sichuan Province, July 20, 2022. (Xinhua/Liu Qiong)

BEIJING, Aug. 31 (Xinhua) -- China's manufacturing sector, shaking off epidemic disruptions seen in the second quarter, has started to regain its momentum, offering strong impetus to the sustained recovery of the broader economy.

The purchasing managers' index (PMI) for the manufacturing sector rebounded from 49 in July to 49.4 this month, data from the National Bureau of Statistics (NBS) showed Wednesday. Of 21 surveyed industries, 12 reported rising PMIs, indicating an improved business climate for the majority of manufacturers.

Some major industries kept expanding. The index of consumer goods production rose from 51.4 to 52.3 in August, and that of the equipment and high-tech manufacturing sectors stood at 50.9 and 50.6, respectively.

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

"Despite the impact of COVID-19 and heatwaves, the Chinese economy has continued its recovery," NBS senior statistician Zhao Qinghe said Wednesday.

In recent months, signs of warming were spotted in factory activities across the country. Carmakers posted surging production and profits, and high-tech manufacturers registered vibrant expansion. Industrial and supply chains, hit hard during the epidemic outbreaks, have recovered and emerged stronger.

Wang Hanchao, founder of a power battery management system producer, said the company's three assembly lines were almost operating at full capacity and he expected that business revenue this year would be double that of 2021.

"The new energy vehicle sector has a promising prospect and China is taking the lead in the related industrial chains, which adds certainty to business development in the future," Wang said.

With the stable performance in key manufacturing sectors, the economy held steady despite challenges and is expected to gather more steam during the rest of the year, analysts said.

Although economic indicators are encouraging, more efforts are still required to reinforce the growth momentum.

Wednesday's data showed that the sub-indices of the PMI measuring new orders, raw material stock, and employment, rose in August from a month ago. But the production sub-index remained flat, and that for suppliers' delivery time edged down.

While large enterprises returned to expansion territory this month, medium-sized manufacturers improved but remained in contraction and small firms continued to see relatively high operational pressure.

To consolidate the recovery trend, China recently implemented a flurry of more decisive, supportive measures.

In a meeting last week, the State Council announced 19 follow-up measures to shape greater synergy among the pro-growth policies already in place, covering fiscal, financial, industrial and other fields. Financial support has been tilted for infrastructure and major projects, and actual borrowing costs will be further reduced for the real economy.

The goal is to promote economic stabilization and upturn, keep major economic indicators within the proper range, and work for the best results possible, according to the meeting.